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Friday, May 12, 2017

Global Shale Law Compendium: Shale Governance in New York

Written
by Chloe Marie – Research Fellow

The
Global Shale Law Compendium series addresses legal developments and other
issues related to the governance of shale oil and gas activities in various
countries and regions of the world. In this article, we will focus to legal,
policy, and governance issues related to shale gas development in the United
States, and more specifically in the state of New York.

High-volume hydraulic fracturing for
shale gas development has long been – and still is – a topic of much controversy
in the State of New York. Ultimately, governmental concerns about the potential
environmental and public health impacts of such technique caused the state to
permanently ban shale gas development in June 2015 after years of public
discussions. Years before the permanent ban was established, the New York
Department of Environmental Conservation (NY DEC), responsible for regulating
the development of oil and gas resources within the state, received some
exploratory well drilling applications for shale gas development. Though these
permit applications were filed in 2008 and 2009, DEC did not grant any permits
prior to the commencement of the ban.

Hydraulic fracturing had been utilized in
New York for conventional and tight gas reservoirs in accordance with the Generic
Environmental Impact Statement (GEIS) for Oil, Gas and Solution Mining
Regulatory Program promulgated by NY DEC in 1992. The use
of high-volume methods for shale gas exploration and production purposes in
other states raised questions about the sufficiency of the GEIS for modern
shale development. Thus, in order to address this technique and its potential
related impacts, NY DEC decided in 2008 to develop a Supplemental Generic Environmental
Impact Statement on the Oil, Gas and Solution Mining Regulatory Program (SGEIS)
and to review the well permit issuance process for horizontal drilling and
high-volume hydraulic fracturing. The purpose of the SGEIS was to identify and
assess the effects of any actions taken by a state agency or local government
on the environment under the State Environmental Quality Review Act (SEQRA).

In February 2009, NY DEC released the Final
Scope of the Draft SGEIS and issued, in September 2009, the Draft
SGEIS for public review. Public hearings were held in New York
City, the Catskills, and the Southern Tier throughout October and November 2009.

Interestingly, on November 29, 2010,
the New York State Assembly passed Senate Bill No. 8129 suspending hydraulic
fracturing for the extraction of natural gas or oil until May 15, 2011, as well
as suspending the issuance of new permits for such drilling. Former Governor
David Paterson, however, vetoed the bill on December 13, 2010 and instead signed
Executive
Order No. 41 on the same day. This Executive Order declared that “there
is a need for further study of this new [high-volume hydraulic fracturing]
technology prior to deployment in New York State” and directed the Commissioner
of Environmental Conservation to publish a Revised Draft SGEIS on or about June
1, 2011. The Executive Order further declared that no permits were to be
approved before the SGEIS became final. On January 1, 2011, Governor Andrew
Cuomo signed Executive
Order No. 2 continuing Executive Order No. 41.

On September 7, 2011, NY DEC issued a Revised
Draft SGEIS for public comment highlighting the development and changes
of the high-volume hydraulic fracturing technique since the release of the 2009
Draft SGEIS. At around the same time, in October 2011, NY DEC also introduced a
draft of the proposed hydraulic fracturing regulations. Some important aspects
of this rule included a ban on the use of high-volume hydraulic fracturing in
the New York City and Syracuse watersheds and within primary aquifers as well
as more stringent regulatory procedures to obtain approvals to drill on private
lands. With the issuance of the Revised Draft SGEIS and proposed regulations, it
appeared that New York eventually would allow for the use of hydraulic
fracturing in modern shale development. Approximately one year later, however, the
regulatory process moved in a different direction.

In September 2012, NY DEC Commissioner,
Joe Martens, asked the New York State Department of Health (NY DOH) to carry
out a review of the Revised Draft SGEIS in order to further discuss the impacts
of high-volume hydraulic fracturing on public health. In a Public
Health Review study dated December 17, 2014, Acting NY DOH
Commissioner Howard Zucker raised some concerns regarding the availability of
scientific information on the relationship between high-volume hydraulic
fracturing environmental impacts and public health. He stated that “the overall
weight of evidence from the cumulative body of information contained in this
Public Health Review demonstrates that there are significant uncertainties
about the kinds of adverse health outcomes that may be associated with
[high-volume hydraulic fracturing], the likelihood of the occurrence of adverse
health outcomes, and the effectiveness of some of the mitigation measures in
reducing or preventing environmental impacts which could adversely affect
public health.” Therefore, the Commissioner recommended that high-volume hydraulic
fracturing “should not proceed” in the State of New York.

Based upon the recommendation in the NY
DOH Public Health Review, NY DEC, on May 13, 2015, published and presented to
the public the Final SGEIS on the Oil, Gas and Solution Mining Regulatory
Program for high-volume hydraulic fracturing. The Final SGEIS is divided into
two parts: Volume
1 relating to the Final SGEIS itself and Volume
2 relating to the Response to Comments. The Final SGEIS also
incorporates the NY DOH Public Health Review. In a Press Release
dated the same day,Commissioner Martens
declared that NY DEC “considered materials from numerous sources, including
scientific studies, academic research and public comments, and evaluated the
effectiveness of potential mitigation measures to protect New York’s valuable
natural resources and the health of residents” before adding that he would utilize
the Final SGEIS as the basis for preparing his formal Findings Statement.

NY DEC Commissioner Martens issued the Findings
Statement in June 2015, concluding that “there are no feasible or
prudent alternatives that would adequately avoid or minimize adverse
environmental impacts and that address the scientific uncertainties and risks
to public health from this activity.” Thus, he declared that “the Department’s
chosen alternative to prohibit high-volume hydraulic fracturing is the best
alternative based on the balance between protection of the environment and
public health and economic and social considerations.” So long as this NY DEC
determination remains in place, high-volume hydraulic fracturing cannot take
place within New York.

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The Center for Agricultural and Shale Law (CASL) provides information and educational programs on agricultural and shale law and policy for producers and agribusinesses, attorneys, government officials, and the general public. The Center does not provide legal advice, nor is its work intended to be a substitute for such advice and counsel.